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Finder of Lost Goods: Examining Rights and Duties

A finder of lost goods is subject to the same responsibility as a bailee. He is bound to take reasonable care of the goods. He must trace its owner. Except the true owner, he is the owner against the whole world. He can sell the goods if they are perishable in nature or if the owner cannot be found out or if the owner refuses to pay the lawful charges of the finder or if the lawful charges are up to 2/3rd of the value of the thing found (Section 71 of the Contract Act, 1872).

As a bailee, the finder of goods is held to a standard of care under Section 151, obligated to exercise reasonable diligence in safeguarding the property. They inherit all the duties of a bailee, including the responsibility to return the goods to the rightful owner. Failure to do so may result in liability for conversion.

Duties and Obligations:
The duties and obligations of a finder of lost goods are treated similarly to those of a bailee. Therefore, the finder's position is considered under the concept of bailment. As the finder is regarded as a bailee, the duties of a bailee under a contract of bailment also apply to the finder. These duties are outlined below:

Duty to Take Care of the Goods: The primary duty of a bailee, and hence the finder, is to take as much care of the goods as a reasonable and prudent person would take of their own goods. While English law recognizes varying degrees of negligence and diligence based on the situation, Indian law mandates a single standard of care: the care that a reasonable and prudent person would exercise, regardless of whether the bailment is gratuitous or non-gratuitous (Sec. 151).

Unauthorized Use of the Goods: Under Section 154, a bailee is liable for making unauthorized use of the bailed goods. If the bailee uses the goods in a manner not permitted by the bailment terms, they must compensate the bailor for any resulting damage. This liability applies even if the bailee was not negligent and the damage occurred due to an accident.

Mixing of Goods: The bailee must not mix the bailor's goods with their own. If the bailee mixes the goods with the bailor's consent, both parties share an interest in the mixture proportionate to their respective shares (Sec. 155). If the bailee mixes the goods without the bailor's consent and the goods are separable, the bailee must bear the cost of separation and any damage (Sec. 156). If the mixture is inseparable, the bailee must compensate the bailor for the loss.

Return of the Goods: The bailee is obligated to return or deliver the goods as directed by the bailor once the bailment period expires or the purpose of the bailment is fulfilled. If the bailee fails to return or tender the goods at the proper time, they are responsible for any loss, destruction, or deterioration of the goods from that time as an insurer (Sec. 161).

Return of Increase or Profit: According to Section 163, unless otherwise agreed, the bailee must deliver to the bailor any increase or profit that accrues from the bailed goods. This ensures that any benefits derived from the goods during the bailment period rightfully belong to the bailor.

Adverse Title: The bailee has a duty not to set up an adverse title to the goods when the bailor demands their return. This means the bailee should not claim ownership or any conflicting rights over the goods against the bailor. Moreover, the finder of goods is not responsible for re-delivering goods to an owner who lacks a valid title.

The Indian Contract Act, in Sections 168 and 169, explains the rights of a finder of lost goods. A finder has the right to keep possession of the lost goods until the true owner comes forward and claims them. The finder is considered the best owner, except for the true owner. This right is given to the finder because of the trouble and expenses they may have incurred to preserve and find the owner of the goods. However, the finder cannot sue the owner for these expenses. Instead, they have a particular lien on the goods, which allows them to refuse to return the items until they are compensated for their expenses.

Another right that a finder has is the ability to claim any reward (Section 168) that the owner has offered for the return of the lost goods. The finder may retain possession of the goods until they receive the reward. If the owner does not provide the reward, the finder can take legal action against them. However, this right is only enforceable if the owner has offered a reward.

In addition to the above rights, the finder also has the right to sell the goods (Section 169) under certain conditions. If the goods are perishable or could lose significant value, the finder can sell them if the owner cannot be found despite reasonable diligence. The finder can also sell the goods if the owner refuses to pay the lawful charges, and those charges amount to two-thirds of the goods' value. By selling the goods, the finder can recover their expenses incurred while preserving and trying to find the owner. The finder has the right to possession of the goods against everyone except the rightful owner.

In summary, the Indian Contract Act provides specific rights to finders of lost goods. These rights include the ability to retain possession of the goods, claim compensation for expenses, and seek rewards. Furthermore, under certain circumstances, the finder has the right to sell the goods if the owner is not found or refuses to pay the lawful charges. These provisions ensure that finders can recover their expenses and prevent the loss of the found goods' value.

Quasi Contractual Situation:
Under the Indian Contract Act, the finder of lost goods is not bound by a contractual agreement but rather by a quasi-contractual situation. This implies a legal obligation that arises regardless of the intent or consent of the parties involved. The term 'quasi-contract' signifies a situation that mimics contractual relations but without an underlying agreement.

The finder of lost goods has a duty to exercise reasonable care and diligence in safeguarding the property. This obligation is not contractual in nature but arises due to the legal principle of equity, justice, and good conscience. The relationship between the finder and the rightful owner resembles a contract, but it is not a true contract in the sense of arising from mutual agreement.

In India, quasi-contracts or restitutionary obligations are recognized as a distinct legal category separate from contracts and torts. This category encompasses situations where the law imposes liability to prevent unjust enrichment, regardless of the existence of an agreement or wrongful act. The principle that 'the law must prevent unjust enrichment' underscores the purpose of quasi-contracts in Indian law.

Criminal Liability:
  • Dishonest Appropriation: If a finder knows the owner or has the means to discover them but still appropriates the goods for their own use, they are guilty of criminal misappropriation.
  • Protection and Restoration: However, if the finder takes possession of the goods to protect them or return them to the owner, they are not committing an offense.
The finder of lost goods under the Contract Act has a legal status akin to that of a bailee, despite not entering into a contract for a specific purpose as in bailment. In essence, the finder serves as a custodian of the goods, with an obligation to prevent their misappropriation or transfer for personal gain. The finder must exercise due care in preserving the goods until the rightful owner emerges.

As a finder, one incurs two primary quasi-contractual obligations: firstly, to exercise due in securing the found goods as a prudent individual would with their own possessions. Secondly, the finder is duty-bound to restore the property to its rightful owner upon discovery.

In summary, a finder of lost goods is legally considered a bailee. They must act responsibly towards the goods and are entitled to certain rights to protect their interests.

Written By: Md.Imran Wahab
, IPS, IGP, Provisioning, West Bengal
Email: [email protected], Ph no: 9836576565

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